The dollar has come under pressure in the first week of 2017 as downside pressure on Treasury yields and measures to curb yuan weakness in China have driven some profit taking on some of the recent gains. This dollar weakness has been seen across the forex majors and on commodity prices too. There has been an interesting breakdown in the 2s/10s spread on US Treasury yields which is back below 120 basis points for the first time in almost two months, a move that has added corrective pressure on the dollar. However the early morning moves have been positive for the dollar as it is clawing back losses with traders looking to position ahead of Non-farm Payrolls. Traditionally in front of Non-farm Payrolls, markets will begin to consolidate, so the early dollar gains today could be an element of that. However, after the ADP employment change came with a slightly negative surprise and it will be interesting to see if this is a sign of a weaker payrolls report, which would see the dollar coming under further pressure.
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